13 Dec How Hospitals Can Cut Medical Liability Costs

HealthLeadersMedia | December 13 – Medical liability costs continue to grow for hospitals, but the secret to controlling this isn’t necessarily found in the financials. It’s cultural. And that may leave a CFO wondering just what he or she can do to bend that cost curve.

But the C-suite is far from powerless. In fact, a CFO can drive change by making it a priority. A greater commitment to patient safety drives lower liability expenses; the changes that reduce medical liability costs are cultural, not overtly financial, say the experts. “First and foremost, the CFO needs to be an ardent supporter of internal quality/safety initiatives,” says Rooney, who is a partner with Tatum, LLC, an Atlanta-based executive services firm, and has served as interim CFO at several hospitals and health systems.

Overall medical liability system costs, including defensive medicine, are estimated to be $55.6 billion in 2008 dollars annually, or 2.4% of total healthcare spending, according to a report by Harvard’s Michelle M. Mello and colleagues, published in the September Health Affairs. That study looked at the cost of the risk-management function. “Using the most conservative estimate of $185,000, the estimated national cost of risk-management operations for all 5,708 registered U.S. hospitals is approximately $1.06 billion. This figure is also conservative because it does not include risk-management costs for other types of facilities, such as independent ambulatory surgery centers.”